INREV sees debt funds raising €8.9bn, led by Europe

Alternative lenders raised a record €8.9bn of new capital for non-listed real estate debt funds in 2013, according to INREV, the European Association for Investors in Non-listed Real Estate Vehicles.

The European real estate association’s Capital Raising Survey found that European investors were the most active, investing almost three quarters of the total capital in debt strategies.

INREV said the results demonstrated the increasing importance of debt in the European real estate market. The UK alone was responsible for more than €2bn of new capital for debt, while €3.5bn was raised for joint ventures and club deals.

Non-listed funds attracted €18.1bn in 2013 – the most raised since 2007 and 77% higher than the average for 2008-12. A total €47.3bn was raised last year, INREV’s survey of 147 fund managers found. However, European capital accounted for less than half (47.3%) of the total raised in 2013, with North American and Asian investors upping their market shares significantly, accounting for 35.7% and 16.6%, respectively.

INREV said appetite for opportunity and value-added products was behind the increase.

Casper Hesp, INREV’s research and market information director, commented, “These results are further evidence of the global appetite to invest in the European market and the increasing appeal of non-listed real estate as an alternative to other asset classes. The fact that over 50% of new equity was allocated to opportunity and value added funds suggests that the wider economic recovery is giving investors the confidence to take on more risk and seek out new opportunities.”

INREV found that 42.9% of new equity went to opportunity funds last year, compared with 8.4% in 2011.

Pension funds remain the biggest source of capital for non-listed funds (55.8%) and separate accounts (48.4%). Sovereign wealth funds (49.8%) were the largest source for joint ventures and club deals.